34th
Session of the International
Tropical Timber Council and Associated Sessions of the Committees 12 - 17 May
2003 Panama City, Panama

SIDE EVENT: THE LINKAGES BETWEEN TRADE AND ENVIRONMENT IN THE CONTEXT
OF THE WORLD TRADE ORGANIZATION – organized by the World Trade
Organization Trade and Environment Division

Doaa Abdel Motaal (right), World Trade Organization (WTO) Trade and
Environment Division, provided an overview of the trade and environment
debate as it pertains to the WTO. She explained that thisdiscussion started in 1991 with the tuna-dolphin dispute, in
which the US imposed an import ban on Mexican tuna on the grounds that
Mexico’s tuna fishing practices resulted in high levels of dolphin
mortality. In this case, Mexico challenged the US import ban under GATT
rules, arguing that the US had no right to take trade measures to address
environmental concerns outside their territory (extraterritorial
measures), and should not discriminate against imports on the basis of
process and production methods (PPMs). Whether or not countries should be
allowed to discriminate between “like” products, she said, lies at the
heart of the trade and environment debate.

Motaal explained that the
WTO wants to create and open and non-discriminatory multilateral trading
system. Underscoring that the WTO is not an environmental protection
organization, she noted that although both the WTO and ITTO aim to
facilitate trade, the ITTO aims to ensure that trade takes place in a
sustainable manner, whereas the WTO does not have this goal. She stated
that the WTO should ensure that its rules do not stand in the way of
sustainable development, but that it must be vigilant against countries
that take protectionist trade measures under the guise of environmental
concerns.

Motaal
then gave an overview of GATT rules that are relevant to the
trade-environment debate. She explained that GATT Article I on the
“Most-Favored Nation” stipulates that countries must not
discriminate between “like” products from different sources, and
that GATT Article III on “National Treatment” specifies that
countries must not discriminate between imported and
domestically-produced “like” products. By way of example, she said
countries cannot place higher tariffs on plywood from country “A”
than from country “B”, and cannot give privileges to domestic
plywood over imports. This, she stressed, is the backbone of the
multilateral trading system.

Motaal
also drew attention to GATT Article XI on the “Elimination of
Quantifiable Restrictions”, which stipulates that countries cannot put
quantifiable restrictions, or bans, on any product that they import or
export. She noted, however, that GATT Article XX on “General
Exemptions”, states that violations to GATT rules are permissible when
taken to protect human, animal or plant life or health, or to conserve
an exhaustible natural resource, provided that such measures are taken
in conjunction with restrictions on domestic production and consumption.
She highlighted that this may be of particular relevance to the ITTO
because tropical forests are an exhaustible natural resource. By way of
example, she explained that a country banning certain wood imports in
order to conserve an exhaustible natural resource, if challenged, would
be asked to show how it is restricting domestic production and
consumption, and may be asked to consider non-discriminatory methods,
including stumpage fees or logging taxes.

Motaal
then highlighted the WTO’s Committee on Trade and the Environment (CTE),
which was created in 1995. She noted that the CTE addresses the
relationship between multilateral environmental agreements (MEAs) and
WTO rules, noting that the WTO considers the ITTA to be an MEA in this
context. She said the CTE attempts to determine whether specific trade
obligations (STO) of MEAs are compatible with WTO rules, and if not,
considers what can be done to ensure harmony between the two. She noted
that the CTE also addresses issues such as product labeling, and the
environmental effects of removing trade restrictions. Providing an
example, she noted that Japan declared that trade liberalization and
tariff reductions in the forest sector would not necessarily benefit the
environment, whereas the US argued that trade liberalization can only
improve forest management.

Motaal
then drew attention to the WTO Doha Development Agenda. She explained
that paragraph 31 of the Doha Ministerial Declaration calls for new
negotiations on the relationship between MEAs and WTO rules, information
exchange, observer status, and trade liberalization of environmental
goods and services. She noted a division between people who are calling
for automatic conformity to MEA STOs, and those who argue that the WTO
should address STOs on a case by case basis. She highlighted that
paragraph 31(iii), calling for new negotiations on reducing tariff and
non-tariff barriers to trade for environmental goods and services, could
be relevant for the ITTO because it could cover sustainably managed
timber if WTO members agree that it is an environmental good.

She explained that
paragraph 32 of the Doha Ministerial Declaration calls on the CTE to
report to the Cancun Ministerial Conference in September 2003 on the
desirability of expanding negotiations on the environment beyond
paragraph 31.